I-04.

05

On January 1, 20X7, Jacqueline Fernandez formed a corporation to purchase wheat

harvesting equipment and provide contract support services to farmers throughout the
Midwest. Information about the first year of operation follows:

Jan. 1 Investors provided $2,500,000 of cash in exchange for stock of

Fernandez Corporation
Jan. 1 Purchased combines and trucks in exchange for $1,000,000 cash and
a $3,000,000 note payable

Feb. 7 Purchased $40,000 of supplies on account that will be needed during

the upcoming harvest

Mar. 3 Paid wages of $65,400

Apr. 1 Billed customers for services in the amount of $230,000

Apr. 11 Paid $30,000 toward the purchase of February 7

May 1 Purchased a $24,000 insurance policy, recorded as prepaid insurance

June 6 Collected $210,000 on accounts receivable

June 9 Paid wages of $130,600

June 15 Paid $30,200 for fuel costs

June 20 Paid $12,500 for lodging costs incurred by crew

June 30 Paid $120,000 of interest and $80,000 to reduce the balance of the
note payable
Aug. 1 Billed customers for services provided in the amount of $812,000

Sept. 3 Collected $715,000 on accounts receivable

Sept. 16 Purchased $25,000 of supplies on account

Sept. 25 Paid $61,200 for fuel costs

Oct. 20 Paid $8,100 for lodging costs incurred by crew

Nov. 3 Paid wages of $125,900

Dec. 15 Collected $100,000 as deposits from customers who contracted for

20X8 harvesting services
Dec. 31 Declared and paid a $25,000 dividend to shareholders
 I-04.05

Fernandez Corporation uses the following accounts:

Cash
Accounts
Receivable
Supplies
Prepaid
Insurance
Equipment
Accumulate
d
Accounts
Depreciatio
Payable
Interest
n
Payable
Unearned
Revenue
Notes
Payable
Capital
Stock
Retained
Earnings
Dividends
Revenues
Wage
Expense
Fuel
Expense
Lodging
Expense
Insurance
Expense
Supplies
Expense
Interest
Expense
Depreciatio
n Expense
Income
Summary
(a Journalize the listed transactions.
)
(b Post the transactions to the appropriate general ledger accounts.
)
(c) Prepare a trial balance as of December 31.
(d Journalize and post adjusting entries based on the following additional information.
)
The equipment had 25-year life, with no salvage value.
Supplies on hand at year end amount to $20,000.
At year end, $115,000 of additional interest is due on the note payable.
The insurance policy covered a 12-month period commencing on May 1.
At year end, Fernandez had provided $30,000 of unbilled services to customers.
These services will be billed in early 20X8.

(e Prepare an adjusted trial balance as of December 31.

)
(f) Prepare an income statement and statement of retained earnings for 20X7, and a
classified balance sheet as of the end of the year.

(g Journalize and post closing entries.

)
(h Prepare a post-closing trial balance as of December 31.
)
Name:
I-04.05(a)
Date: Section:

GENERAL JOURNAL                                                               

Page 1

Date Accounts Debit Credit

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Date Accounts Debit Credit

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Date Accounts Debit Credit

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Date Accounts Debit Credit

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Date: Section:

CASH

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

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ACCOUNTS RECEIVABLE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

SUPPLIES

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

PREPAID INSURANCE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

Name:
I-04.05(b,d,g)
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EQUIPMENT

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

ACCUMULATED DEPRECIATION

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

ACCOUNTS PAYABLE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

INTEREST PAYABLE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

Name:
I-04.05(b,d,g)
Date: Section:

UNEARNED REVENUE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

NOTES PAYABLE

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

CAPITAL STOCK

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

RETAINED EARNINGS

Date Description Debit Credit Balance

Jan. 1 Balance forward - - -

Name:
I-04.05(b,d,g)
Date: Section:

DIVIDENDS

Date Description Debit Credit Balance

REVENUES

Date Description Debit Credit Balance

WAGE EXPENSE

Date Description Debit Credit Balance

FUEL EXPENSE
Name:
I-04.05(b,d,g)
Date: Section:

Date Description Debit Credit Balance

LODGING EXPENSE

Date Description Debit Credit Balance

INSURANCE EXPENSE

Date Description Debit Credit Balance

SUPPLIES EXPENSE

Date Description Debit Credit Balance

INTEREST EXPENSE

Date Description Debit Credit Balance

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DEPRECIATION EXPENSE

Date Description Debit Credit Balance

INCOME SUMMARY

Date Description Debit Credit Balance

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I-04.05(c)
Date: Section:

FERNANDEZ CORPORATION
Trial Balance
December 31, 20X7

Debits Credits

$ - $ -
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I-04.05(d)
Date: Section:

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Date Accounts Debit Credit

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I-04.05(e)
Date: Section:

FERNANDEZ CORPORATION
Adjusted Trial Balance
December 31, 20X7

Debits Credits

$ - $ -
Name:
I-04.05(f)
Date: Section:

FERNANDEZ CORPORATION
Income Statement
For the Year Ending December 31, 20X7

Revenues
$ -
Expenses
$ -
-
-
-
-
-
- -
Net income $ -

FERNANDEZ CORPORATION
Statement of Retained Earnings
For the Year Ending December 31, 20X7

Beginning retained earnings $ -

Plus: Net income -
$ -
Less: Dividends -
Ending retained earnings $ -
Name:
I-04.05(f)
Date: Section:

FERNANDEZ CORPORATION
Balance Sheet
December 31, 20X7

Assets
Current assets
$ -
-
-
- -
Property, plant & equipment
$ -
- -
Total assets $ -

Liabilities
Current liabilities
$ -
-
- $ -
Long-term liabilities
-
Total liabilities $ -

Stockholders' equity
$ -
-
Total stockholders' equity -
Total liabilities and equity $ -
Name:
I-04.05(g)
Date: Section:

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Date Accounts Debit Credit

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I-04.05(h)
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FERNANDEZ CORPORATION
Post-Closing Trial Balance
December 31, 20X7

Debits Credits

$ - $ -